Adviser Profile: Alistair Mann of Clocktower Fund Management

Alistair Mann is using the same strength of mind that helped him recover from serious injury to build Clocktower Fund Management into a high flyer.

Alistair Mann, managing director at Clocktower Fund Management, has built a niche retirement planning firm based in the quiet and well-heeled town of Cobham, Surrey. It is a world away from his previous life in the Special Air Service (SAS) serving alongside the likes of soldiers-turned-authors Andy McNab and Chris Ryan.

Their books are full of harrowing experiences and Mann has a similar story: he suffered a horrific injury when assaulted by services personnel while on a foreign exercise. It left him paralysed from the chest down. He showed immense courage and determination in fighting his way back to recovery.

He has continued to show these qualities in his subsequent career in financial services. Mann is taking a brave step with his business by setting up a separate non-regulated company, Clocktower Financial Planning, with the aim of reducing regulated turnover.

Non-regulated venture

Mann believes about three quarters of all he does for clients is technically unregulated, so he plans to charge for this work through the new company. This may make the business structure more complicated, but it should dramatically reduce costs associated with regulation.

‘I’m just launching [the new company] and have written to clients about it already. We engage with all new clients as both regulated and non-regulated entities, and undertake regulated work as required,’ he says.

‘[Many advisers’] PI and FSCS levels are doubling. This will at best stop mine going up. Otherwise, I have to pass those costs on to the client. I think almost all of what we do for existing clients is unregulated and I could consider deregulating completely, but I want to be completely clean about our regulatory obligations for existing clients and we do undertake regulated activities for new clients.’

Transparent operation

Mann believes he is justified in having a separate company as long as this is made clear to clients.

‘I haven’t spoken to the Financial Services Authority about this but I am happy to. I think it’s entirely appropriate to have a separate company for generic advice; for instance, telling people how much they need to save to achieve their retirement goals, and reviewing their savings options without providing any actual product or specific investment advice.

‘Obviously, it needs to be clear to the client that it is non-regulated. Importantly, this is part of financial planning for clients regardless of whether any investment or product is involved. I find clients often want assistance in these areas more than around selecting which provider or what product to use,’ he says.

‘Similarly, understanding investment risk and objectives around risk profiling is important to clients and we increasingly offer these aspects of financial planning as stand-alone advice to clients regardless of whether they invest with us or elsewhere.’

Perseverance pays off

Mann appears a little gruff on first meeting, but this impression quickly falls away. ‘I think I have more of a sense of humour than people perceive,’ he grins. ‘They perceive austerity.

‘I have inherited from my father a strong sense of right and wrong. Everyone else thinks I’m complicated but I just think I’m straight and sometimes abrupt.’ In contrast to his description, he talks easily and cheerfully.

He relates the story of his medical recovery in detail. ‘In 1985, I had an injury that bruised my spinal cord, causing paralysis from the shoulders down. I was in hospital for three months and then in a rehabilitation unit for 15 months. It turns your world on its head.

‘I couldn’t move, roll over or anything, except count the rotation of the ceiling fan. But I was making progress and was very positive-minded. The consultant kept suggesting I would not recover and told me to rest rather than try too hard. I kept talking to [other people who thought I could not recover]. I thought there was no harm in trying. Their attitude towards me started to change.’

With a huge amount of resolve, he gradually started to regain motion and is now fully mobile, although he only has partial feeling from the chest down, except for one finger.

‘From that, I realised lots of things about how to manage yourself in the workplace as well,’ says Mann. ‘I was SAS support staff working in communication. But even there you learn a lot about how to manage your mental processes… by just serving alongside them,’ he points to photos on the wall showing him with SAS colleagues, including McNab and Ryan. ‘My experiences taught me that most levels of stress in life and work are disproportionate.’

After leaving the army, he went to the Job Centre where staff ‘had preconceptions’, thinking that, as a discharged soldier, he would not be clever enough to fulfil his ambition of going to university. That ambition is as yet unfulfilled but Mann set out to show they were wrong. He worked and studied hard at broker Hogg Robinson Financial Services and later as an IFA, and is now a Personal Finance Society (PFS) fellow.

Building the business

In 1999, Mann set up IFA firm Independent Investment Planning, initially based in Hereford and relocated to Surrey in 2011, together with co-founding director Alison Brent.

The firm changed its name in 2009 when another shareholder left the business. Mann picked the new name from an armed forces charity called the Clocktower Fund.

From the start, Mann built single premium business by running investment seminars on retirement planning.

The firm charges 1% on an ongoing basis and invests monies directly with discretionary fund managers (DFMs) or into its model portfolios. The total expense ratios (TERs) are around 2.2% for Clocktower portfolios and around 2.4% for DFMs, including wrap and adviser charges. With many advisers now aiming for TERs of 2% or less, this seems slightly expensive.

Mann rejects this idea. ‘I want to make my business deeper, not wider,’ he says. ‘You could go to a firm charging 0.5% with three advisers and six paraplanners: they are wider not deeper. I don’t want that bigger infrastructure. My clients will pay more but as long as they are happy with the service, it’s not relevant,’ he says.

He says the firm is cutting costs, however, and six months ago it dropped initial charges from 3% to 1%. Clocktower is also about to start offering lower cost passive portfolios.

Outsourcing fits plan for bigger bank of wealthy clients

Around 65% of Clocktower’s funds under advice are with discretionary fund managers (DFMs), 20% are in its own model portfolios and the rest is legacy business. Next year Mann wants to start outsourcing even more so he can concentrate on financial planning.

There is no minimum investment, but typical DFM clients have between £200,000 and £1 million of investable funds.

‘That has shifted equity exposure from about 22% to about 26%,’ says Mann. ‘I agree with what some respected fund managers have been saying: that we might be entering the next bull run. And I have a few concerns with fixed interest and gilts, though index-linked gilts have a place because there are still some inflation concerns,’ he says.

‘There is some good performance coming out of UK funds. It is not a bad time for cautious investors to be contemplating [more exposure to] UK equities.’

DFM business

Wells’ TER is 1.4%, excluding the adviser charge, and Clocktower portfolio TERs are between 1.2% and 1.3%, including the wrap charge but excluding the adviser charge. Wells has recently launched passive portfolios and Clocktower plans to offer them to its model portfolio clients as a lower-cost alternative.

Mann says outsourcing to DFMs gives his clients access to expertise he would not be able to provide. ‘I could spend my time researching funds and I am three days away from the market. A DFM has a team – if the manager is not at their desk, someone else is – and if they make a decision, it is implemented immediately,’ he says.

‘If I introduce you to a DFM, we will spend our time thinking about [financial planning] and I can manage that relationship. I can’t do that at the same time as managing your portfolio for you.’

Benefits of outsourcing

Mann believes the benefits of outsourcing outweigh the costs. ‘I picked Wells because there was a strong correlation between its model portfolios and mine. The difference is that I have 10 funds, Wells has 20 or 25 and it is finding funds I wouldn’t because of its research. Its charges are a little more but its returns warrant it,’ he says.

‘I would like to get to the position where all of our funds under advice are with DFMs because that would mean all our clients have more than £200,000,’ he says. ‘Initially I’d like to get to 100 premier clients with an average of £500,000. We are in the £200,000 to £1 million assets under advice space, and eventually I would like to move us into the £500,000 to £2 million space.’

Positioned for growth

Clocktower splits clients into passive and premier levels. Mann explains: ‘Premier clients see me a lot, and we are very proactive. Passive clients receive automatic rebalances and are reviewed at least annually. This might be via a paper report, telephone or face-to-face meeting. Clients on model portfolios tend to be premier.’

The firm specialises in inheritance tax, investment, pension and tax planning. ‘That was the simplest route to profitability because you focus on people with £100,000 to invest, not £10,000,’ says Mann.

Clocktower stopped doing seminars in 2008 because it had reached capacity. Since then the team has concentrated on refining processes to the point where Mann now feels he can increase the number of premier clients from 65 to 100. To achieve this, he plans to return to the strategy of sending out mail shots inviting people to retirement planning seminars.

Being located in such a wealthy area means Clocktower’s modest aims should be achievable. ‘In a one-mile radius from Cobham High Street are there 100 people with £500,000 to invest?’ asks Mann. ‘Yes, in fact there’s a lot more. It’s bizarre, you’d think there would be more competition in Cobham, but it is thin on the ground.’

Another plan is to charge interested clients between £500 and £1,000 a year to attend investment seminars run by top economists or fund managers. But would clients pay that much for such a service?

‘These are people who clients wouldn’t normally be in the company of or be able to put questions to,’ says Mann. ‘I have bounced [the idea] off a few clients and they think it is a good idea. They have the time, money and interest because they are investing actively. This concept is exclusive and doesn’t exist in the market.’

Aiming higher

To add to his chartered status and PFS fellowship, Mann is now working towards the Society of Trust and Estate Practitioners qualification and is considering a Pensions Management Institute qualification. His long-term plan is to keep building the business, ‘enjoying it’ and not deciding anything else until he is 55 in three years’ time.

Mann has two children, aged 23 and 24. ‘That means they are nearly off the payroll and my time is freer,’ he says. This gives him time to fly the gyrocopter he bought last year every weekend.

‘Flying lifts you away from everything physically and metaphorically. Also I keep fit: because of my medical history, I have to,’ he says.

His army experiences were highly formative, but now he wants to move on and develop.

‘When you’re a soldier, you are defined by what you do and there is a temptation to continue in that way even after you leave,’ he says. ‘Then you get to an age where you think: "I’m not going to rule the world or even get much bigger." Gradually you feel it’s time to slow down, do other things and be defined by who you are and not by what you do.’

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